Wednesday, 21 March 2012

The problem with regional public sector pay cuts...

Living between London and Leeds, it is clear to me that one area requires me to, on a day to day basis, spend more money than the other. Which is why the idea of regional public sector pay is not without basis; if it costs less to live, why shouldn’t you get paid less?

Except areas that cost less to live in are, often, going to be poorer areas, with less money flowing, less investment, less demand…cutting public sector pay will see decreased personal spending when the economy needs people to spend more. Geographical poverty and inequality affects people’s lives, as well as personal poverty. Living in an area with less jobs, less commerce, poorer infrastructure, less opportunity…this makes life harder.

And cutting the pay of people in these areas will hurt those economies, and make those problems worse.

Even in richer, but still cheaper to live in areas, like Leeds, the nationwide problems of unemployment and a lack of growth will be made worse by cuts in pay that will hurt demand in an economy where people already won’t, or often can’t, spend enough to help create growth.

It would, perhaps, make more sense to raise the pay of public sector workers in richer areas; the cost of living does provide a valid argument for greater flexibility of public sector pay. But flexibility should mean real attention to the varied needs of regional economies; not an attitude of “it costs less to live, you get less money”. And it certainly shouldn’t mean a cut in pay when people, already, aren’t spending; this will hurt both regional, and the national, economy.

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